FF Challenge – Day 4: Start Tracking Your Income and Expenses

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Good morning guys, it’s time of Day 4 of the Financial Freedom Challenge!

Day 3 was not a practical task so I can’t verify your actual progress. Anyway, I sincerely hope you have completed it because it’s a very important step, trust me.

As I tell you every day if you have any questions or concerns write a comment and I’ll be glad to answer you. Don’t be shy, we are all here to learn!

Today we’re going to start tracking our Income and Expenses. If you’re ready to proceed with Day 4, go ahead with the reading 🙂

Start Tracking Your Income and Expenses

What’s today’s task?

Today we have a crucial task: starting to track our income and expenses. I recommend taking this step very seriously today and forever because it can make a huge difference in your financial situation in the medium and long term.

What do I mean by tracking Income and Expenses?

Well, it’s simple. Every time you get an income, write it down. Every time you have an expense, write it down. At the end of the month compute your total income and total expenses. Easy, right?

As for Day 1 and Day 2 of this challenge you can choose between different options. My suggestion is to track your income and expenses through a well organized Excel spreadsheet. This is the option that I’m currently using. But if you prefer to do it on paper or through an app, no problem. Your choice.

Monthly Budget Screen

I created two Excel files for this purpose: the first in English, the second in Italian. Download them if you like:

You can see in the image above my Excel file. It has two sheets (Instructions and Monthly Budget). I suggest you to carefully read the Instructions before starting to use the spreadsheet.

I divided it into two sections: the green section for the Income and the red section for the Expenses. I set up 5 cells for the Income section (if you’ve more Income, you’re on the right track to achieve Financial Freedom!). In the Expenses section, you’ll see many categories: Housing, Transportation and so on.

Pay particular attention to entering expenses in the correct category.

As I wrote in the article dedicated to these Excel files, you need one new Monthly Budget every month. So you need to choose between using a different spreadsheets or to create every month a new Monthly Budget sheet in the same spreadsheet. In the Instructions page, I carefully explain how to do it. Your choice, the important thing is to do it every month in a constant manner.

It a basic version. If you have enough Excel skills I suggest you to create your own file that best reflects your needs.

Why do we have to track Income and Expenses?

Well, for many reasons. First of all, by tracking them you can have a clearer idea where your money comes from and (more important) where your money goes. This is a very important step because it allows us to understand which categories to focus on to decrease our expenses. So pay attention to this step because it will be very useful in the future (during the challenge but above all after it).

A brief summary of today’s task of the Financial Freedom Challenge

  1. Take a sheet of paper or an Excel file
  2. Track all your income and expenses
  3. At the end of the month compute your total Income and total Expenses
  4. Repeat points 2 and 3 every month

My Experience

I have been tracking my Income and Expenses for several years. It is one of the first financial things that I started to do because right away I wanted to be clear about my financial situation.

I’m currently using a mix of two different instruments: an Excel file and a Kakebo. Kakebo is a Japanese “book of accounts for household economy”. In essence, it is a book that allows you to track all your income and expenses by category day by day so you can have a clear summary of your finances at the end of the month. It is suitable for those who prefer paper to digital. This is the version I’m currently using.

Suggested Resources:

  • Monthly Budget Planner – Control your debt and organize your finances (physical)
  • Kakebo – Track your Income and Expenses (physical)
  • Spending Tracker – Mobile tracker for your expenses (app for Android and iOS)
  • Spendee Budget & Money Tracker – Mobile tracker for your expenses (app for Android and iOS)

Final recommendations

I want to emphasize again the importance of this step. So today is even more significant to say that if you have any questions about this step, write a comment and I’ll be glad to answer you 🙂

Besides share in the comments your opinion about this step. Are you already tracking your Income and Expenses? How is going your Financial Freedom Challenge?

Come back tomorrow for the fifth step and remember to follow us on Facebook and Instagram! Share this challenge on your social media: this will keep you motivated during the path, trust me 🙂 If you want a direct contact with me (answers, discussions, doubts, advice…) or the other participants of the Challenge, join our Telegram groups (ENG Group, ITA Group).

Finally, subscribe to the blog if you want to receive the next steps directly on your email:

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2 Replies to “FF Challenge – Day 4: Start Tracking Your Income and Expenses”

  1. I m answering in english – I Try – : i think what you suggested is right , but 1) quite difficult to realize : it’s difficult to even have the time to have dinner some night , I immagine I would skip and/or forget many days to write down what I spent that day. 2) How to consider expences which are not common but extraordinary ? For example if I’m paying to home rennovation or something ?
    thank you ! ciao

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    1. Hello! I understand your point and I thought exactly like this before starting to track them. I suggest you to try! When you get practice you’ll need very little time and it’s very very important to do it 🙂 You need to write down even extraordinary expenses but I suggest you to highlight them in some way (different color..) so you can easily find them and understand their impact on your budget.
      Thank you for the comment and have a good day!

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